General Power of Attorney

What is a General Power of Attorney?

A general power of attorney is a legal document that enables the principal to appoint an attorney to make decisions and take actions on their behalf. Unlike a specific or limited power of attorney, which is confined to particular tasks or time periods, a GPA grants the attorney broad and comprehensive powers. These powers usually cover financial and legal matters but do not include decisions about the principal’s health or personal welfare.

Uses of a General Power of Attorney

The scope of a GPA can be extensive. Here are some of the common uses:

1. Financial Management: The attorney can manage bank accounts, pay bills, make investments, and handle other financial transactions.
2. Property Transactions: This includes buying, selling, leasing, or managing real estate and other properties.
3. Business Operations: If the principal owns a business, the attorney can make decisions related to the running of the business.
4. Legal Affairs: The attorney can handle legal matters, including filing lawsuits, defending claims, and signing legal documents.
5. Tax Matters: The attorney can deal with tax authorities, file returns, and manage any tax-related issues.

Benefits of a General Power of Attorney

There are several advantages to establishing a GPA:

1. Continuity of Affairs: In the event of illness, travel, or any situation where the principal is unable to manage their affairs, a GPA ensures that there is no disruption.
2. Trust and Flexibility: The principal can choose someone they trust implicitly, knowing that their affairs will be managed in their best interest. The GPA can be tailored to include specific instructions and conditions.
3. Convenience: For those who may be elderly, frequently travel, or have complex financial or business matters, having an attorney manage these aspects can be significantly more convenient.
4. Avoidance of Legal Complications: Without a GPA, if the principal becomes incapacitated, it may be necessary to apply for a deputyship through the Court of Protection, which can be time-consuming and costly.

Limitations and Risks

While a GPA offers many benefits, it also comes with limitations and potential risks.

1. Duration: A GPA is usually only valid as long as the principal has mental capacity. If the principal loses capacity, the GPA becomes invalid. For enduring powers, a Lasting Power of Attorney (LPA) is more appropriate.
2. Abuse of Power: There is a risk that the attorney could misuse their powers for personal gain. It’s crucial to appoint someone trustworthy and to include checks and balances.
3. Legal Boundaries: The attorney must act within the confines of the law and in the best interest of the principal. Any deviation can lead to legal consequences.
4. Revocation: The principal can revoke the GPA at any time, provided they have mental capacity. This can lead to instability if not managed properly.

Establishing a General Power of Attorney

Creating a GPA involves several steps:

1. Choosing an Attorney: The principal must choose a suitable person or persons to act as their attorney. This should be someone trustworthy and capable of managing the responsibilities.
2. Drafting the Document: The GPA document needs to be drafted, detailing the powers granted to the attorney. It should be clear and precise and cover all potential areas of authority.
3. Legal Advice: It’s advisable to seek legal advice to ensure that the document is correctly drafted and meets all legal requirements.
4. Signing and Witnessing: The document must be signed by the principal and witnessed by an independent third party. In some cases, the attorney may also need to sign to confirm their acceptance of the role.
5. Registration: While GPAs do not typically need to be registered with a government body, it may be necessary to notify relevant institutions (such as banks) of the GPA’s existence.

The Role of the Attorney

An attorney’s responsibilities under a GPA are significant and multifaceted. They must act in the best interest of the principal and follow any instructions or conditions outlined in the GPA. Key duties include:

1. Acting in Good Faith: The attorney must always act honestly and in the principal’s best interest, avoiding any conflicts of interest.
2. Keeping Records: Detailed records of all transactions and decisions made on behalf of the principal must be kept.
3. Consulting the Principal: Where possible, the attorney should consult with the principal and keep them informed of major decisions.
4. Avoiding Misuse: The attorney must not use their position for personal gain or engage in any activities that could be considered a misuse of power.

Revocation and Termination

A GPA can be revoked or terminated under several circumstances, including:

1. Revocation by the Principal: The principal can revoke the GPA at any time, provided they have the mental capacity to do so. This must be done in writing and communicated to the attorney and any relevant third parties.
2. Loss of Capacity: If the principal loses mental capacity, the GPA typically becomes invalid. In such cases, an LPA or deputyship may be necessary.
3. Death: The GPA automatically terminates upon the death of the principal.
4. Specified Conditions: The GPA may include specific conditions or events that trigger its termination, such as the completion of a particular task or the occurrence of a specific date.

Transition to Lasting Power of Attorney

Given that a GPA ceases to be effective if the principal loses mental capacity, it is often prudent to consider setting up a Lasting Power of Attorney (LPA) in conjunction with or as an alternative to a GPA. An LPA can cover both property and financial affairs, as well as health and welfare decisions, and remains valid even if the principal becomes mentally incapacitated.

Conclusion

A general power of attorney is a versatile tool for managing personal affairs and ensuring continuity in the face of life’s changes. At DLS Solicitors, we believe that careful planning and legal guidance are crucial in creating a general power of attorney (GPA) that meets your needs effectively. Understanding the uses, benefits, and limitations of a GPA can help you make informed decisions to protect your interests and provide peace of mind.

Whether you need a GPA for financial management, property transactions, or business operations, our experienced team is ready to assist you at every step. We provide comprehensive legal advice, precise document drafting, and ongoing support to ensure that your general power of attorney serves its intended purpose responsibly. Contact us today to learn about how we can help you secure your future with a general power of attorney.